Thinking of investing in the Lennox Head area? You’re well ahead of the game.
After working with communities in the area for over 30 years, we’re more than confident that Lennox Head is now primed for growth. Today we want to share our property portfolio tips with savvy investors who are keen to get in as early as possible.
Start by calculating your equity
Before you can buy your first investment property you’ll need to find out exactly how much equity you have. ‘Equity’ refers to the difference between the amount you owe on your mortgage and the market value of your home. For example, if you owe $500,000 on a property worth $800,000, you can access $300,000 in equity.
Once you’ve established the amount of equity you can work with, you can then approach your mortgage lender to ‘leverage’ your equity – in other words, to borrow against it. This means you don’t have to save up a new deposit lump sum before you buy your next investment property.
Buy for capital growth and positive gearing
The key to establishing a valuable multi-property portfolio is to buy in areas that are highly likely to increase in value. These are the real estate markets that will show what’s known as ‘capital growth’. As the value of your first investment property increases, you’ll accumulate more equity. You can then borrow against this equity when it comes time to buy your next investment property.
‘Positive gearing’ is another key term here. This simply means that the costs of the loan on your investment property are fully covered by the rental repayments you’re receiving from tenants (or holiday-makers). If your costs aren’t covered and you end up ‘negatively geared’ it will become more difficult to find ways to cover your repayment costs are your property portfolio expands.
Keep increasing the value of your properties
Along with buying for capital growth, you can boost the value of each new investment property through renovations. This is why savvy investors tend to focus on properties they can improve over time, rather than those that are already renovated – they have more room to move when it comes to building up their equity.
Why Lennox Head should be part of your portfolio
For property investors who want to grow their portfolios, buying the Lennox Head area is an intelligent choice. Its proximity to holiday hotspots like Byron Bay make it desirable, but it doesn’t yet have those same soaring prices.
Those looking closely at the area can already see signs of a rising market. Buyers who can get into the market early will see the biggest equity gains, making it easier to add to their portfolios over the long term.
Disclaimer: The information in this website and the links provided are for general information only and should not be taken as constituting professional advice from the website owner – Elders Real Estate Lennox Head. Elders Real Estate Lennox Head is not a financial adviser. You should consider seeking independent legal, financial, taxation or other advice to check how the website information relates to your unique circumstances. Elders Real Estate Lennox Head is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by use of this website.